tv Bloomberg Markets Middle East Bloomberg September 29, 2016 12:00am-1:00am EDT
rishaad: it is in :00 a.m. across the emirates. that's 8:00 a.m. across the emirates. anchor: i am angie lau in hong kong. welcome to bloomberg markets middle east. oil is boosting the markets across asia. if you take a look at what they are promising, a lot of people see a lot of upside. absolutely, angie. it has been an incredible few hours. a dramatic finale to what has caught the market completely wrongfooted. yousef: the expectation was that there would be no agreement, and exchange of views for a more formal agreement in siena. what they came out with what -- in vienna.
there is 33 million barrels per day. together a chart for you so you can get the perspective. we are going back on an opec group level two levels we saw earlier in -- to levels we thought earlier in the year. how these production cuts are going to be divided. saudi arabia gave into iran in terms of letting them pump at will. they do not have to cut back. that needs to be discussed. they have set up a committee that is going to look at that and also the timeline of this brief is going to be set out later on in the years. month.oing to be a six revisited on a quarterly basis? what is the role of non-opec in all of this. russia said they will talk to opec once they reach a proposal. now that there is a proposal on
the table, we will see if they pick up the conversation. angie: it is all about the details at the vienna meeting. minutestrading for 20 now. the pickup their. 1.2%.in japan timing -- claiming 1.2%. we are seeing things bright and across the region as a result of these higher oil prices. yousef: -- east, undere middle two hours away from the opening of the emirates market, dubai and abu dhabi. 10:00 a.m. local time. liftdeal was not able to the spirit of the market class that region there. dealing with that asact of the austerity move
it takes a look at just what the budget it looks like in this sustained oil market across in egypt and tel aviv. let us take a look there as well. you can see a selloff across the region, middle eastern markets in his last clothes. let us see what it is today. close.is last let us see what it is today. looking into deserving compliance failures at the biggest u.s. banks. the review will investigate breaches including mortgage abuses. yemen responding to--yellen responding. the imf says japan inc. has taken unfair advantage of its workers in wage negotiations. the funds local mission said the
reduction in wage bargaining power has swung too far in favor of employers. japanese businesses have been reluctant to answer calls for higher salaries than capital investment. corporate cash and deposit the road to a record $2.4 trillion last quarter. labor market reforms are very important. moremics needs to do much the labor market a lot to achieve its objective of higher growth and better labor participation. >> a unit of china costco shipping says it has turned into a 35 year deal to operate a new containment terminal and abu dhabi. the 30 $800 million deal -- the deal -- it is the company's first such a deal neein the gulf. it has a market share of almost
a present. the u.s. has approved the sale gulf allies.ts to officials say the long-delayed sales of boeing and lockheed planes can go ahead. it promised to bolster the weapons of sunni nations. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am shery ahn, this is bloomberg. yousef. that. i will take back to our top story. we'll hit a three-week high after opec wrongfooted everybody and agreed to cut output and production for the first time in eight years. no doubt, it was a long night for everyone, including yourself in algiers. how did things play out on the ground? at the end of the day,
opec came out with this agreement to cut production a little bit. 250,000 barrels per day on the low-end, and that my goal 750,000 barrels per day on the higher end of that range. the 40 hours to the lead up of this decision. we have underscored that there was an acknowledgment of a tremendous amount of oil that had entered the market earlier in the year. there was a sense of urgency that they had to take action, and domestic pressures, what you are seeing in saudi arabia in terms of them burning through therefore and currency reserves, cutting back on government spending. there is a lot more that needed to be dealt with much quicker. fundamentally, when we spoke to the iea, they said it would take a lot longer than thought for the market to rebalance. they knew they had to act. they spent some four hours in that room. we waited until late in the
meeting when making came out that decision. that is your some of the voices. -- listen to some of the voices from that meeting. so, we debateddo hours inarios over six a very positive manner, full understanding, and in a spirit of full cooperation. agreement,d excellent agreement. i am very happy after 2.5 years, we had a very constructive .greement in opec opec has overcome the many difficult situations. the oilthose, some of ministers right off the back of that decision.
we are going to have to wait to see how the details of how they split up production cuts are going to play out. angie. angie: and of course what that means for the long-term, right? yousef: absolutely. again, at the end of the day, the global supply-demand picture has shifted. i'veare changing strategy an opaque group. there is about the resilience of non-opec production, about u.s. producers being able to step up their game. that the run you through what some of the analysts have been saying. they said the agreements will take one million barrels per day off the oversupply part of the equation, and that could mean a deficit by the fourth quarter. we heard from berkeley. they said it was a safe saving method. they would watch how that implementation actually materializes because we already heard some dissent from the
iraqi delegation and they were pointing out that the estimates of their oil production are up for debate, and that they are not convinced of those numbers. plenty still to discuss your that is why we are going to bring in tony reagan for additional perspective. tony, you are not impressed by the latest agreement. you do not think much of it, right? a well, it is a bit of success having gone into the meeting looking athis as having no chance of any agreement. make it again down the road and will talk in november that they kicked the can down the road in november -- they kicked the can down the road and we'll talk again in november. the devil is in the details. about, they are talking about a range, which
could be a very modest cut of about a quarter of a million 80 to select -- million pd. a 2% cut. after record high production, particularly by the middle east producers, and so, it is possibly tokenism. the issue is how are they going to apply this? they have already said it is not going to be applied uniformly across all members. they would never get agreement with liberia and nigeria for that. who is going to take a hit? how have they accommodated in iran, who went into this meeting seeking a green light for production of 6000 barrels per day. accommodated?" is going to take these cuts and for how long? angie: it is close to a record high here.
nobody is doubting that. it is very munipal. isn't it a point -- it is very miniscule. isn't it a point that they agreed? saudi arabia andy roddick have not gone along for a long time, and now, they seem to be in agreement. they are talking about that, something they have not done for eight years. they talked, they are talking again about managing production, something they stepped away again from two years ago. yes, it does look as if there does seem to be a meeting of the minds during the key players, iran and saudi arabia, although we have no idea about the details. be if the iran is going to allowed to increase production, the cut is going to be much more significant on some of the
others. who is going to bear the brunt of the cut? is it going to be the middle east, the other middle east producers? angie: that is the question for sure. >> primarily, saudi arabia. angie: tony reagan, stay right there. we are going to get back to you. a whole lot more coming up with tony. let us get the latest with the markets. here is juliette. nevertheless, investors are certainly buying into the surprise announcement, and we have seen some very solid conviction in asian markets today, led by thosad energy d by those energy players. as you would expect, it is the same picture in australia, where you are seeing the front runners up by over 12%. origin, a standout. solid buying coming through on the back of that rally in wall
street as well. all southeast asian markets looking solid. rebounding and recouping yesterday's losses. remember, yesterday, more than half of japanese equities were trading. we have a weaker yen today. support coming through for export stocks. the other big mover that we have seen in response to this rally in crude oil is an commodity-based currencies. leadingysian ringgit the gains. that is dollar weakness there. the malaysian ringgit up 0.4%. you have seen a rally coming through those other commodity-based currencies like the aussie dollar, which is just under $.77, a three-week high. the kiwi up by 0.1%. yousef. yousef: thanks, juliette. still to come on the program, why saudi arabia's first international bond sale may have hit a setback after congress obamat to override an
yousef: welcome back. you are watching bloomberg. i'm yousef gamal el-din in algiers. angie: m angie lau in hong kong. a quick check of the latest business flash headlines for you. --uble airbag maker caught a takata surged. terms of not been disclosed, but the nikkei reports and expected price of around $70 million is expected for that. urban makes interior pieces. its customers include nissan and
delta airlines. yousef: bloomberg has been told admit to -- will bribing officials in africa. and african subsidiary of america's largest listed hedge fund could enter a guilty plea as early as thursday to finalize a deferred prosecution deal with the justice department. --ie: bloomberg is told that is in separate settlement talks with the justice department over the toxic mortgage funds that crisis.he financial they want to wrap up the cases before the new administration takes over. yousef: let us get back to tony reagan, an independent oil and gas consulting. let us get back to the numbers that have been suggested. barrels -- 757,000 barrels cut.
is that enough oil to kick out of the market given the resilience that we have seen from the non-opec front, given russian pumping at record levels, and oil rigs coming back in the united eight? do they need -- the united states? do they need to do more here? tony: the devil is in the details. are we cutting from september production, which was particularly high? no. it is likely to be the opec august production. 3 million,own to that is a tiny reduction. they are talking about this , 2.7.of .24 relatively% cut, modest. yes, iis getng attention at the moment. but we are waiting to see what would actually happen, who will take the brunt of this cut
because there is an expectation that for instance, iran may not. will it be mainly the middle east producers rather than other opec members such as nigeria? could saudi step up and take a very significant that cop -- significant cut? the asserting their position as the policeman of opec, the balance of opec. it is a position they walked away from two years ago. are they going to move back? angie: what about the business end of the question here? yet long -- the long-term outlook here. does this change what companies decide to do increasing production, expanding oil rigs and the like. is this move enough? tony: no. there is a great deal of uncertainty about what will
actually be implemented. it is bullish news at the moment, and prices have come up, but they could well come back off as you absorb this and say, ok, if this happens, then it is helpful. it is an acknowledgment that they cannot continue to pump out ord levels. the attention may turn to a glut, the fact that we have record high stocks, global stocks, 3.1 million bp. that is huge. an expectation it will still be about three by 2017. that is massive. is normal working levels. you have got to absorb those huge turks before the market comes back into balance. stocks before the market comes back into balance. it is really tokenism.
there is a followthrough, subsequent cheating. no subsequent cheating, but which nations are set to win here? iranan, do you think, h clearly said, it is not going to be us. they look to be winners here. tony: yeah, they do. they seem to also be reasserting they shoulde that have a 30% share of opec production. -- 13% share of opec production. you could say iran is the winner. we do not know what has been agreed and what will actually be limited. i would not rush out to suggest saudi arabia may be a loser. again, wait and see what role they take in the future. it may be extremely influential. angie: yeah. tony reagan, thank you. tony: next issue is what --
pleasure. angie: finish that thought very quickly. tony: ok, the issue is what happens to prices if we see prices are up at 60, 70, that is tremendous encouragement to non-opec producers to open the taps again. u.s. production has been coming down a little. 2016 production will be higher than 2014, and all of this started. the u.s. could turn those taps on relatively easily. we could be got to $30 oil. angie: good point. look like $60 might get everybody back in the market. tony reagan, thank you so much for that. independent oil and gas consulted joining us from singapore. the fight must go on. we will have the latest for you, next. this is bloomberg. ♪
yousef: companies are trading seoul.in the move brings some really to the come bomber it -- to the conglomerate. let us bring in rosalind chin for more context. what is the story here? rosalind: the district court said the judge did not see a need to issue an arrest warrant for the chairman of the group. prosecutors had essentially an arrest warrant for him on embezzlement charges. it seeks to normalize business activities as soon as possible. of theve, the rejection arrest warrant, does offer some kind of reprieve for lotte group. they can also get more evidence,
gather more evidence for another renewed attempt at getting an arrest warrant if they should want to under korean law. there is a bit of a reprieve, but the proceedings will be continuing in terms of this group.gation into lotte stocks trading higher on the news. all of these units are higher in trade today. angie: troubles externally, but also internally. these investigations, after a family feud that have the impacted business. rosalind: all of these investigations kind of come after that event and that has really seen him getting question for hours last week -- questioned for hours last week. angie: we were watching that closely. rosalind: impacts reverberate on
rishaad: it -- angie: it is 1:30 in tokyo. markets celebrating yen weakening for the third day. the big story of the day is oil. we have entered the last 90 minutes of trading in japan. ♪ angie: top stories on "bloomberg markets: middle east." commodity currencies have enjoyed a boost from opec's decision to cut output for the first time in eight years.
crude is at its three-way tie with energy shares jumping the most in six months. agreed toia and iran trim output to around 33 million barrels a day. yousef: analysts say it was the saudis who blinked first in algiers with a decision to end their two-year policy to pop at well. they have the highest budget among the world's 20 biggest economies. the oil ministers as prices need to rise to encourage long-term investment in the rail industry. -- oil industry. angie: one of korea's largest corruption investigations is on the back foot after the court rejected an arrest warrant for the chairman. he faces embezzlement charges. lotte group has been in turmoil for over a year with several senior family members being
questioned about corruption. yousef: it is a: 30 a.m. in dubai, 5:30 a.m. in out years. angie: it is 12:30 in hong kong. i'm angie lau. anna: just starting to count you down to the start of all the european on bloomberg. we will pick up on the oil story. use of, i know you have been covering that extensively. we will also be in paris, because in paris we have a motor show taking place. shows typically attract a lot of attention. carmakers like to show off their new releases. with the growth of social media and the carmakers' ability to reach out direct to their customers, it seems that many won't show up at all. 1.2 5 milliond people who filled the paris motor show.
we will see what kind of numbers we get at this year's biannual show, which is where we typically see these new brands being shown off. what is going to be the big theme this year? certainly green technology. electrification is a big driver. regulation around that will be crucial. consumer demand for crossovers and suvs are also on the radar. we will be hearing from the management at bmw. and vw, crucially, so we will have plenty of news. yousef? yousef: in the u.s., we saw banks come into focus. where are we at with the deutsche bank story in europe? little unrest for shareholders. we have had constant news around this since the start of this week. mario draghi, the ecb president, is being asked about this in his
trip to berlin. it was a trip where he was going to face a lot of questions about interest rates and monitoring policy -- is it working? he talked about this as well, of course, and he did say that he does not share the views of the ecb low interest rates being partly to blame for the problems lenders are currently facing. he says if a bank represents a systemic threat to the eurozone, it can't be because of low interest rates. it has to do with other reasons. also, with emulation to deutsche bank, the german leader -- german lender is trying to sell in a chinese lender. they decided in december they would sell their state. they are trying to get the money out of the country, and it seems like some of the chinese regulations that are designed to protect the stability of the currency could be slowing the process down for deutsche bank.
and of course, we all know why they want to pull out. they are selling u.k. assets to shore up their balance sheet. angie? angie: anna, thanks. we are watching saudi arabia's first international bond sale because it may be delayed by over 9/11.ation congress voted to override president obama's veto of a bill that would allow victims of the terror attacks to sue saudi officials. we've got more on this story. saudi arabia has been a main u.s. ally for years. is the relationship unraveling here? not reallyngie, it's unraveling, but it is coming under significant string. if you look at president obama's tenure over the past eight years, you can see the iran deal , the saudis lobbying against it. there is rumbling in the gulf
that the u.s. is disengaging from the middle east, forcing a u-turn in american policy. the saudis trying to lobby against the 9/11 bill for months, even reportedly threatening to pull out their investments in the u.s. that did not work. even on the saudi side, having decades of experience ambassadors in the u.s. with washington ties, the latest envoy is not known to have the as the foreign. it is definitely coming under constraint, especially as the u.s. is now preparing for another administration. angie: so what does the decision mean? does it have consequences on saudi investments, perhaps? reporter: yes, we have been told it could delay the bond deal. imagine you are the government of saudi arabia. you already have significant issues to talk about with investors on the string of
public finances, the oil prices. add this and investors will say, ok, what does that mean if we invest? are we going to be liable to legal action? that adds more questions. going forward, saudi arabia is talking about ipo in less than 5% of aramco and possibly dual listing. through, would we see american investors jumping, american funds buying aramco shares, or would there be questions about that? and fors uncertainty, saudi officials i imagine this is a needed at this time. unneeded at this time. angie: so for everybody in this region in asia, does this mean we will see a speed up of saudis pivoted to the east? interesting,s is because if you see trade flows between saudi trade data, you will see that in the last five years, the u.s. and china have
been jockeying for first place. that did not happen before. this is a product of the last decade. fiveu look at saudi's biggest trade partners, you see japan, india, asian countries. its say aramco went head-to-head with the ipo. with that boost, the chances for other asian hubs to be the dual listed markets, with that mean that you would see more asian interest in saudi debt, more saudi pivoting in terms of trade? that is possible. a trend is going on. it could be accelerated by this, unless we see a significant narrowing down of the language of the bill, which some congressmen and senators have indicated already. once it becomes law, maybe they will have a chance to soft and -- to soften more so it doesn't affect the ties badly. angie. yousef: thanks.
now, a slowdown in dubai's economy is putting some of the building projects there and as developers scale back on some of the projects. let's get the full story. what projects are going ahead, and which ones are not? reporter: good morning. basically, a lot of the projects that dubai wanted to do are going ahead. projects like the canal, they are working on it. it is almost near completion. iny are planning a project the middle of the city, thousands of homes, offices, hotels. that's going ahead. what we are starting to see is a lot of those large projects, which in the past would have been accelerated, now we are seeing the designs take much longer, the implementation take much longer. talkingelopers are about timeframe, they are basically talking about something around 10 years, 15 years.
a minute,aying, wait let's try selling and see how demand is, and if demand is not there, they will try to scale down the project. bit of realismle that we did not see before in dubai that is starting to sink in among developers. so what else should we be watching out for in this space? reporter: basically, one of the things we have seen the government do as property markets clashed in 2008, they tried to limit mortgage the sales tax was increased, and that had an impact. right now, we are looking at prices that are expected to drop another 10% next year after dropping around 7% this year. that made the city a little bit more affordable for a lot of , and policymakers say
this is not necessarily a bad thing, defining values, because that will bring in new customers, new demand from people who live here, and that will be more resilient. since oil prices have collapsed, we have seen that the decline in house prices has not been as massive as we have seen before. thanks. that's our goal for economy reporter. let's go to shery ahn for the first word headlines. is at this at -- is hesitant to go into syria. when the rate cut jumped last week, geopolitical threats were cited among the reasons. washington says it will suspend contact with russia over syria
unless the kremlin halt to the bombing of aleppo. secretary of state john kerry said last week that moscow was failing to use its evident -- use its influence over assad and stop the violence. it is a serious commercial hub about 3opulation of million. hundreds of thousands have fled, but the rest are living under siege. a stakeis considering sale in its oil and gas industry as it faces its full -- its first full-year economic contraction in 25 years jury at advisors are working on a plan to generate an immediate injection of funds. nigeria holds an average 55% stake in several joint ventures with companies such as shell and exxon. iag andairways' parent its largest shareholder, qatar airways, are set -- are setting , sharingt venture
revenue and costs on services. the deal comes at the end of next month, and we will see each visit beyond the respective capitals. i'm shery ahn. this is bloomberg. yousef? thanks.sef: still to conduct, saudi arabia's peg to the u.s. dollar is causing a headache for the country's central bank. we will get you some perspective on that. make sure you stay tuned. this is bloomberg. ♪
a shanghai bank says the board has approved the writing off of almost a billion dollars worth of assets. the bank did not identify the assets in a statement to the shanghai stock exchange, and a spokeswoman declined to comment further. however, it did say that it would keep pursuing debt where it has the right of recourse. yousef: the company that invented the smartphone has finally admitted that the. it is backing out of -- admitted defeat and is backing out of the market. .ike very -- blackberry making handsets after losing the battle to apple in samsung long ago. it will focus on its profitable and growing software business. the move had been in the works since the ceo took over almost three years ago. qantas is warning passengers about the risk of smartphones overheating on planes. that's after fire broke out on a flight to new york in june.
of the lithium batteries was crushed in a business class seat. there are concerns over lithium batteries on aircrafts following bans on hoverboards and the samsung note7 smartphone. says it isdit suisse seeing a lot of opportunity in the middle east, specifically in terms of the number of millionaires. tope are expected to half a billion. credit suisse is international theth management ceo says uae, kuwait, and saudi arabia are at the top of its list. >> if you look at the middle east, we see uae, saudi, and kuwait as interesting markets. aside from these three markets, asalso see qatar and bahrain interesting opportunities, and we are exploring all of it. clearly a very large
market. if you just step back and look at the middle east more generally, in 2015i think we had 300,000re than millionaires. that is expected to grow to 500,000. that is growth trajectory, attractive to us, and that is a clientele we would like to bank to yousef: -- we would like to bank. yousef: great to have you back on the program. let's kick off with the state of play in saudi arabia, news on that delete on sale on pressure -- that is the result of rates on hold from the fed. saudi arabia is trying to get liquidity back into the financial system. what is your take? this is sort of inherent in the system of a currency pack. autonomy overave monetary policy, then if you don't have that many physical
reserves, and saudi arabia, unlike qatar and the uae, has not that many reserves proportional to the size of the economy, then you can inevitably run into this problem. it is not really evitable. they get more bonds, liquidity out of the system. there is a sense that the fed hiking rates has already determined a rise in rates in interbank rates in the u.s. this is true for all countries except for kuwait. i think they have to live with this. with anill change indirect tax that is not income related, but that is still a year and a half away. that is probably the most efficient a way around it. for the moment, they have to live with it. i would say something else. the likelihood that rate hikes are going to be stopping in the
u.s. is much higher than participants expect. that also explains a lot of the dollar weakness. in my opinion, it is also the recent strength of the oil price, to which opec is sort of buying in. it makes it easier. it has made the opec deal easier because they are blowing in the direction of winds instead of against the winds. i would say that the situation of rates are going to go up in the u.s. it is not that likely. it is making it easier for saudi. of course, they have to pull through this transition period. they will have more transition revenues. yousef: we had seen quite a bit of selling pressure in saudi stocks over the last 48 hours. it has to do a lot with how the
opec discussion would unfold. what is your analysis of the framework that came out from opec's meeting, and their decision to cut back on some of that production for the group as a whole? tothat going to be enough rebalance the market, given what we are seeing around the world? guest: i think there is now a macro global demand environment that is helping to keep the oil price high, in the sense that it was the boj and ecb running increasingly into accommodating policy and easing limits. they are having difficulty in easing their policy. you will see a dollar that will remain relatively weak. that is boosting china demand.
opec is doing nothing else than taking advantage of this opportunity. the market is oversupplied. if you are in such a difficult .ituation, then you intervene a floor, orto put better, you try to reinforce a floor that is already solidified because of still strong china demand because of the weak dollar. how they will implement it, i am afraid that the bulk of the cuts must be taken by saudi arabia. saudi arabia has recognized that some countries are less controllable, and has recognized that this is a favorable moment they wantsignal that to reinforce a floor that insinuates solidifying on the oil price, but it also indicates of fact.a second order the first-order effect is that
the weakening dollar is keeping prices sustained. helps the oilalso prices well. what is your outlook for the rest of the year and into 2017, if the details of the meeting, through positively for the market? i think that we are not going to see major cuts. i think that as long as demand remains relatively sustained, oil prices are also going to remain sustained. there is, of course, a risk that at some point in time -- you have to step back and look at it in perspective -- the global economy is slowing down. i mean, i don't see an enormous side to the oil prices. i really don't see it. angie: thank you so much for that. up, power plays. we are going to take a look at
the opec agreement shows some light on the relationship between saudi arabia and iran, and it seems that in this heavy rate -- in this heavyweight fight, iran went first. let's bring in anthony for more context. what do we know went well, and what do we know did not go well? anthony: i think it is saudi that blinked first. they seem to have recognized that there was a need to do something, and they seemed to be the one that decided that they would drop back some of their production. what i think it took was the saudi recognition that iran has the position they need to be able to increase their production a little bit more as
they come out of sanctions. that was one of the points that iran really insisted on, and from what we have learned from this decision yesterday is they seem to have gotten that. iran would be exempted from any cuts, and it would be saudi arabia that would be bringing their production down. that is a big change in the dynamics. that is something we will see going forward into further quotas opec individual are always a big issue of contention among the countries. of course, every nation once to ump as much -- wants to pou as much as they can. citigroup is kicking the can down the road, so we will have that issue with us, but yes, there was a change in dynamics. anthony, quickly, impact on the market, any at all? yes or no?
>> opec strikes a deal. oil prices stabilize after surging 5% on an agreement to cut production for the first time in eight years. deutsche bank's china challenge. the lender is set to face a hurtful moving money from the leaveshile mario draghi blame on industry behavior. the paris motor show, speaking with industry leaders after the scandal rocked peoples motors.